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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Simrat and Bir are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2025, after closing the books, their Capital Accounts stood at ₹4,80,000 and ₹6,00,000 respectively. On 1st May, 2024, Simrat introduced additional capital of ₹1,20,000 and Bir withdrew ₹60,000 from his capital. On 1st October, 2024, Simrat withdrew ₹2,40,000 from her capital and Bir introduced ₹3,00,000. Interest on capital is allowed @ 6% p.a. Subsequently, it was noticed that interest on capital @ 6% p.a. had been omitted. Profit for the year ended 31st March, 2025 amounted to ₹2,40,000 and the partners’ drawings were Simrat ₹1,20,000 and Bir ₹60,000. Compute the interest on capital if the capitals are (a) fixed, and (b) fluctuating.
Case (a) – Fixed Capitals:
Opening capital: Simrat = ₹4,80,000 + ₹2,40,000 – ₹1,20,000 = ₹6,00,000; Bir = ₹6,00,000 + ₹60,000 – ₹3,00,000 = ₹3,60,000.
Interest on Simrat’s capital = (6,00,000 × 6% × 1/12) + (7,20,000 × 6% × 5/12) + (4,80,000 × 6% × 6/12) = ₹3,000 + ₹18,000 + ₹14,400 = ₹35,400.
Interest on Bir’s capital = (3,60,000 × 6% × 1/12) + (3,00,000 × 6% × 5/12) + (6,00,000 × 6% × 6/12) = ₹1,800 + ₹7,500 + ₹18,000 = ₹27,300.
Case (b) – Fluctuating Capitals:
Opening capital: Simrat = ₹4,80,000 + ₹2,40,000 + ₹1,20,000 – ₹1,20,000 – ₹1,44,000 (profit) = ₹5,76,000; Bir = ₹6,00,000 + ₹60,000 + ₹60,000 – ₹3,00,000 – ₹96,000 (profit) = ₹3,24,000.
Interest on Simrat’s capital = (5,76,000 × 6% × 1/12) + (6,96,000 × 6% × 5/12) + (4,56,000 × 6% × 6/12) = ₹2,880 + ₹17,400 + ₹13,680 = ₹33,960.
Interest on Bir’s capital = (3,24,000 × 6% × 1/12) + (2,64,000 × 6% × 5/12) + (5,64,000 × 6% × 6/12) = ₹1,620 + ₹6,600 + ₹16,920 = ₹25,140.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.63 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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